An order that is made regarding a licence holder reflects a situation at a particular point in time. The status of a licence holder can change. Readers should check the current status of a person’s or entity’s licence on the Licensing Link section of FSRA’s website. Readers may also wish to contact the person or entity directly to get additional information or clarification about the events that resulted in the order.
IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006,
S.O. 2006, c. 29, as amended (the “Act”), in particular sections 38, and 39;
AND IN THE MATTER OF Preeti Amin, Raaj Vikash (Roger) Kalwaney, and Canada Mortgage Group Inc. also operating as Dominion Lending Centres Canada Mortgage Group
NOTICE OF PROPOSAL TO IMPOSE ADMINISTRATIVE PENALTIES
TO: Preeti Amin
AND TO: Raaj Vikash (Roger) Kalwaney
AND TO:
Canada Mortgage Group Inc.
also operating as Dominion Lending Centres Canada Mortgage Group
455 Cochrane Drive, Unit 23
Markham, ON L3R 9R3
TAKE NOTICE THAT pursuant to sections 38 and 39 of the Act, by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director, Litigation and Enforcement (the “Director”) is proposing to impose the following administrative penalties:
- nine (9) administrative penalties in the total amount of $45,000 on Preeti Amin for contravening section 3 of Ontario Regulation 187/08 by causing Canada Mortgage Group Inc. to contravene subsections 24(1), 25(1), and 27(1) of Ontario Regulation 188/08;
- an administrative penalty in the total amount of $10,000 on Raaj Vikash (Roger) Kalwaney for contravening subsection 2(1) of Ontario Regulation 410/07; and
- nine (9) administrative penalties in the total amount of $45,000 on Canada Mortgage Group Inc. for contravening subsections 24(1), 25(1), and 27(1) of Ontario Regulation 188/08.
Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.
SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.
YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 39(2) AND 39(5) OF THE ACT. A
hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within 15 (fifteen) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed, or emailed to:
Address:
Financial Services Tribunal
25 Sheppard Avenue W, Suite 100
Toronto, ON M2N 6S6
Attention: Registrar
Fax: 416-226-7750
Email: contact@fstontario.ca
TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal. TAKE FURTHER NOTICE of the payment requirements in section 4 of Ontario Regulation 192/08, which state that the penalized person or entity shall pay the penalty no later than 30 (thirty) days after the person or entity is given notice of the order imposing the penalty, after the matter is finally determined if a hearing is requested or such longer time as may be specified in the order.
For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 extension 7294.
At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.
REASONS FOR PROPOSAL
I. INTRODUCTION
- These are the reasons for the proposal by the Director to:
- Impose nine (9) administrative penalties in the total amount of $45,000 on Preeti Amin (“Amin”);
- Impose an administrative penalty in the total amount of $10,000 on Raaj Vikash (Roger) Kalwaney (“Kalwaney”); and
- Impose nine (9) administrative penalties in the total amount of $45,000 on Canada Mortgage Group Inc. (“Canada Mortgage Group”).
II. BACKGROUND
A. Parties
- Amin was licensed as a mortgage agent (licence #M19001463) under the Act beginning on July 5, 2019, until the expiry of her licence on March 31, 2023.
- Kalwaney is licensed as a mortgage broker (licence #M08009114) under the Act and has been licenced as such since April 1, 2012.
- Canada Mortgage Group is licensed as a mortgage brokerage (licence #12401) under the Act and has been licensed as such since July 24, 2013. Kalwaney is, and was at all material times, the sole director and officer, and the principal broker of Canada Mortgage Group.
- SJ is a lawyer licensed to practice law in Ontario and is the sole director and principal of BLPC. Kalwaney and SJ are married. Canada Mortgage Group and BLPC operate out of the same office address.
- SW is a mortgage agent licensed under the Act.
- At all material times, Amin and SW were authorized to deal and trade in mortgages by and on behalf of Canada Mortgage Group.
- Kalwaney and SW are also directors and officers of FFI, a mortgage administrator licensed under the Act. FFI is also a private lender which funds mortgages.
B. Misconduct while Dealing in Mortgages
Overview
- In or around March 2021, Canada Mortgage Group, through Amin, arranged mortgages for two clients, MC and BD (collectively, the “Borrowers”), from private lenders. Canada Mortgage Group represented the Borrowers and the lenders in both of the mortgage transactions, which are described below.
- The Borrowers were vulnerable senior citizens and had low and/or fixed annual incomes between approximately $20,000 to $31,000.
- The Borrowers had prior mortgages and one or more Notices of Security Interest (“NOSIs”) registered on their residential properties. Some of these mortgages and NOSIs arose from, or were connected to, home service contracts sold by door-to- door salespersons. At least one mortgage on each of the properties was funded by FHL, a private lender.
- The Borrowers retained SJ and BLPC, who were recommended by Amin and Canada Mortgage Group, for legal representation for the transactions.
- While arranging the mortgages for the Borrowers, Canada Mortgage Group and Amin, among other things,
- did not take reasonable steps to determine if the mortgages arranged for the Borrowers were suitable;
- did not disclose, in writing, material risks associated with the mortgages; and
- did not disclose, in writing, certain conflict-of-interest issues associated with the mortgages.
- Further, Amin and Canada Mortgage Group also failed to disclose FFI’s relationship with Kalwaney and Canada Mortgage Group to borrowers in three other mortgages brokered by Amin in which FFI was the lender.
B.1 The MC Mortgage
- In March 2021, Amin, as a mortgage agent with Canada Mortgage Group, arranged a $155,000 mortgage from individual private lenders for MC (the “MC Mortgage”).
- MC was 76 years old at the time when the mortgage application for the MC Mortgage was submitted. The application stated that MC was a pensioner with an annual pension income of approximately $31,000. MC’s residential property in Hamilton (the “MC Property”) was put forward as security. The transaction closed on March 21, 2021.
- MC stated to FSRA that, on or around December 21, 2020, she was induced, pressured, and deceived by a door-to-door salesperson, among other persons, into taking a $30,999 mortgage, at an annual interest rate of 15.48% with a 5-year term, from FHL for certain work to be performed on her property.
- MC also had a conventional mortgage from the Bank of Nova Scotia with a balance of $135,000 with an interest rate of 3.94%, and with approximate monthly payments of $660. A NOSI, securing $11,867, was also registered on the title to the MC Property prior to the MC Mortgage.
- MC stated to FSRA that the same door-to-door salesman informed her that Amin will contact MC for a mortgage for renovation work, even though MC insisted that she did not need any renovations.
- With respect to the MC Mortgage,
- The term of the mortgage was 1 year with an annual interest rate of 10.90% with interest-only payments of $1,407.92 every month;
- The above stated interest on the mortgage, amounting to approximately $16,895, was to be prepaid from the mortgage proceeds. The entire principal amount was to become due after the expiry of the 1-year term;
- The total disclosed cost of borrowing, including pre-paid interest for the MC Mortgage amounted to $41,994.04 and the disclosed Annual Percentage Rate (“APR”) was 27.09%;
- Amin provided a hand-written document claiming it contained the notes on the MC Mortgage file. The notes purport that MC called Amin on March 4, 2021 and discussed the need for a mortgage, upfront payments, liens, and appraisal. MC denies that any details of the mortgage was discussed;
- Prior to Amin’s phone call with MC on March 4, 2021, Canada Mortgage Group obtained a credit report for MC and Amin sent out a “lender submission” email for a $155,000 mortgage to a law firm; and
- The mortgage amount of $155,000 was not proposed or asked for by MC. Amin, Kalwaney, and SW decided that a mortgage of that amount would be suitable for MC. MC advised FSRA that she did not consent to a credit check and that she was not told how the amount was determined.
- MC defaulted on the MC Mortgage. The private lenders obtained a default judgment, dated December 14, 2022, from the Ontario Superior Court of Justice ordering MC to, among other things, deliver possession of the MC Property to the private lenders. MC eventually sold the MC Property to a third party, who allowed MC to lease the property.
B.2 The BD Mortgage
- In March 2021, Amin, as a mortgage agent with Canada Mortgage Group, arranged a $210,000 mortgage from individual private lenders for BD (the “BD Mortgage”).
- BD was 68 years old at the time when the mortgage application for the BD Mortgage was submitted. The application stated that BD was an employee at a food service company and that she had an annual income of around $20,660. BD’s residential property in Simcoe (the “BD Property”) was put forward as security. The transaction closed on March 26, 2021.
- BD stated to FSRA that beginning in or around August 2020 she was pressured, induced, and deceived into procuring several home renovations on the pretext that she would get her money back. A $30,999 mortgage, at an annual interest rate of 15.48% with a 5-year term, from FHL funding such renovations and services was registered on the title to the BD Property.
- Three NOSIs securing $26,162 were also registered on the title to the BD Property prior to the BD Mortgage.
- With respect to the BD Mortgage,
- The term of the mortgage was 1 year with an annual interest rate of 7.99% with interest-only payments of $1,398.25 every month;
- The above stated interest on the mortgage, amounting to $16,779, was to be prepaid from the mortgage proceeds. The entire principal amount was to become due after the expiry of the 1-year term;
- The total disclosed cost of borrowing for the BD Mortgage, including prepaid interest, amounted to $42,828 and the disclosed APR was 20.39%;
- BD stated to FSRA that Amin called her regarding a mortgage without BD ever contacting Amin;
- Amin provided a hand-written document claiming it contained the notes on the BD Mortgage file. The notes purport that BD called Amin at 2:30 PM on March 2, 2021 and discussed the need for a mortgage, prepayments, liens, and appraisal. However, BD denies that she initiated the call and denies that any details of the BD Mortgage, including a loan amount, interest rate, and a credit check, were discussed during the March 2, 2021 call. BD stated that Amin called to tell BD that she qualified for a “Blue-Chip” reverse mortgage;
- Moreover, prior to Amin’s phone call with BD on March 2, 2021, Canada Mortgage Group obtained a credit report for BD and SW also sent out a “lender submission” email and an application for a $230,000 mortgage to a law firm;
- The final mortgage amount of $210,000 was not proposed or asked for by BD. Amin, Kalwaney, and SW decided that a mortgage of that amount would be suitable for BD;
- On March 4, 2021, Amin sent the application for the BD mortgage and other related documents to an email account purportedly provided by BD via Docusign for signing. However, Amin’s hand-written notes state that BD provided the email account details on March 5, 2021; and
- BD stated to FSRA that no one explained the documents to her and denies electronically signing the application documents on March 5, 2021 as represented by the Docusign summary.
- BD defaulted on the BD Mortgage and the private lenders commenced an action for possession of the BD Property, which BD is defending.
B.3 Relating to both Borrowers
- Amin and Canada Mortgage Group did not present any other mortgage options apart from those finalized in the mortgage applications. They also did not take reasonable and sufficient steps to specifically confirm if the mortgages were appropriate for the needs and circumstances of the Borrowers considering their age and the fact that they had low and/or fixed incomes. In both cases the mortgage amounts greatly exceeded the amount required to discharge the NOSIs and mortgages registered on the Borrowers’ properties.
- The disclosure provided to the Borrowers by Amin and Canada Mortgage Group did not include any disclosure of material risks associated with the mortgage transactions.
- Canada Mortgage Group referred the Borrowers to BLPC and SJ. However, the disclosure provided to the Borrowers did not state that Kalwaney was married to SJ, the lawyer who was representing the Borrowers in the transactions. The disclosure also did not state that BLPC and Canada Mortgage Group operated out of the same office address. BLPC and SJ received $5893.50 on account of fees and disbursements relating to services provided for the MC and BD mortgages.
- Furthermore, between March 3 and March 6, 2021, Amin sent mortgage applications and related documents to both of the Borrowers for signing electronically via Docusign to the same email address – “xclusivemarketing10@gmail.com”. The Borrowers stated to FSRA that this was not their email account. The Borrowers were located in different cities. Amin did not take reasonable and sufficient steps to ascertain who operated the account, if the Borrowers had access to it, and why the same account was being used for both Borrowers.
- Amin stated to FSRA that while arranging mortgages for the Borrowers she discussed exit strategies. The exit strategy purportedly discussed with the Borrowers involved taking a reverse mortgage around or after the end of the mortgage terms of the MC and BD Mortgages.
- Canada Mortgage Group stated to FSRA that an entity named ECC referred the Borrowers to Canada Mortgage Group and advised Canada Mortgage Group that “potential clients” will be contacting Canada Mortgage Group directly.
B.4 FFI Funded Deals - Non-Disclosure of Conflict of Interest
- Between March and September 2021, Amin and Canada Mortgage Group brokered the following mortgages, all of which were funded by FFI.
- A $170,000 mortgage for LR, who was, at the time of the mortgage application, an 80-year-old resident of Toronto, Ontario. The application form for LR’s mortgage stated LR’s annual income as $20,000. The disclosure to borrower relating to the mortgage was signed by LR on March 19, 2021. The transaction closed on March 30, 2021;
- A $120,000 mortgage for DR, who was, at the time of the mortgage application, a 61-year-old resident of Coburg, Ontario. The application form for DR’s mortgage stated DR’s annual income as $27,000. The disclosure to borrower relating to the mortgage was signed by DR on August 24, 2021.
The transaction closed on September 9, 2021; and
- A $150,000 mortgage for SM and MM. SM and MM were 74 and 77 years old at the time of the mortgage application. They were residents of Nepean, Ontario. The application form for their mortgage stated their combined annual income as $48,000. The disclosure to borrower forms was signed by SM and MM on July 15, 2021. The transaction closed on August 9, 2021.
- Canada Mortgage Group represented both the borrowers and FFI in all of the aforesaid transactions. LR, DR, SM, and MM were also among the ECC referrals described above.
- The disclosure document provided by Amin and Canada Mortgage Group to LR did not contain any conflict-of-interest disclosure. The fact that FFI and Canada Mortgage Group were related entities with a common director was not disclosed to LR. Canada Mortgage Group, in a letter to FSRA dated August 23, 2023, admitted to not disclosing actual and potential conflicts of interests relating to the LR Mortgage.
- Further, neither Amin nor Canada Mortgage Group specifically disclosed, in writing, to DR, SM, and MM that FFI and Canada Mortgage Group were related entities with a common director. Mortgage documents made available to FSRA by Canada Mortgage Group do not include any document which contains acknowledgement from DR, SM, or MM of such disclosure.
III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT
A. Failure to Take Reasonable Steps to Ensure Suitability
- Subsection 24(1) of Ontario Regulation 188/08 provides that a brokerage shall take reasonable steps to ensure that any mortgage or investment in a mortgage that it presents for the consideration of a borrower is suitable for the borrower having regard to the needs and circumstances of the borrower.
- Section 3 of Ontario Regulation 187/08 provides that a mortgage broker or agent shall not do or omit to do anything that might reasonably be expected to result in the brokerage on whose behalf he or she is authorized to deal or trade in mortgages to contravene or fail to comply with a requirement established under the Act. This provision is also relevant to Sections III.B. and III.C. of this proposal below.
- Amin, while dealing in mortgages on behalf of Canada Mortgage Group, failed to take sufficient steps to ensure that the mortgages she arranged were suitable for the Borrowers. Several suitability concerns were apparent from the mortgage documents:
- Both of the Borrowers were senior citizens with low and/or fixed incomes;
- The Borrowers’ residential properties, which were also their main assets, were put forward as security for the mortgages thereby compounding the negative consequences of default;
- Both the MC and BD Mortgages were for 1-year terms after which the entire mortgage amount would become payable. It was evident from the income and assets stated in the mortgage applications prepared by Amin that it was very unlikely that the Borrowers could repay the mortgage amount at the end of the term;
- The total cost of borrowing of the 1-year term mortgages exceeded the annual income of the Borrowers;
- A significant portion of the mortgage proceeds were deducted at closing as prepayment of interest;
- The cost of borrowing as stated in the mortgage disclosure was as high as 27.09% of the total mortgage value. Despite this, Amin did not provide any alternative financing options to the Borrowers; and
- The mortgage amounts arranged by Amin far exceeded the amount required to discharge NOSIs and previous mortgages funded by FHL.
- The Director is satisfied that Canada Mortgage Group contravened subsection 24(1) of Ontario Regulation 188/08 by failing to take reasonable steps to ensure that the mortgages arranged for the Borrowers were suitable to their needs and circumstances.
- The Director is also satisfied that Amin contravened section 3 of Ontario Regulation 187/08 by failing to take reasonable steps to ensure that the mortgages she presented to the Borrowers were suitable for them, causing Canada Mortgage Group to contravene subsection 24(1) of Ontario Regulation 188/08.
B. Failure to Disclose Material Risks
- Subsection 25(1) of Ontario Regulation 188/08 provides that a brokerage shall disclose in writing to a borrower the material risks of each mortgage or investment in a mortgage that the brokerage presents for the consideration of the borrower.
- No written disclosure of material risks associated with the mortgages arranged for the Borrowers was provided by Amin and Canada Mortgage Group to the Borrowers. Amin and Canada Mortgage Group, among other things, did not identify and disclose any risks based on the age and income of the Borrowers, and the fact that the Borrowers’ residential properties were put forward as security for each of the transactions.
- Detailed disclosure was especially important in the relevant circumstances which involved short-term high interest private mortgages being offered to persons on low and/or fixed income, who had limited knowledge of such transactions. The details of the mortgages were not explained to them.
- The Director is satisfied that Canada Mortgage Group contravened subsection 25(1) of Ontario Regulation 188/08 by failing to disclose in writing to the Borrowers all the material risks associated with the mortgages brokered for them.
- The Director is also satisfied that Amin contravened section 3 of Ontario Regulation 187/08 by failing to disclose all material risks to the Borrowers, causing Canada Mortgage Group to contravene subsection 25(1) of Ontario Regulation 188/08.
C. Failure to Disclose Conflicts of Interest
- Subsection 27(1) of Ontario Regulation 188/08 provides that a brokerage shall disclose in writing to a borrower any conflict of interest or potential conflict of interest that the brokerage or any broker or agent authorized to deal or trade in mortgages on its behalf may have in connection with a mortgage or a trade in a mortgage that the brokerage presents for the consideration of the borrower.
- Subsection 27(2) of Ontario Regulation 188/08 provides that a brokerage shall obtain the written acknowledgement of the borrower with respect to such disclosure.
- Section 33 of Ontario Regulation 188/08 requires written disclosure to be expressed in plain language that is clear and concise and presented in a manner that is logical and likely to bring the information to the attention of the person intended to receive it.
- Neither Amin nor Canada Mortgage Group specifically disclosed in writing to LR, DR, SM, and MM that Kalwaney was a director and officer at both Canada Mortgage Group and FFI, the lender in their mortgage transactions. No conflicts were disclosed to LR, and the purported disclosure provided to DR, SM and MM was inadequate, having regard to the nature of the conflict and requirements of section 33 of Ontario regulation 188/08.
- Furthermore, BLPC, through SJ, acted as the Borrowers’ lawyer for their transactions. Amin and Canada Mortgage Group recommended SJ and BLPC to the Borrowers, but did not disclose to the Borrowers, in writing, that SJ was Kalwaney’s spouse and that BLPC and Canada Mortgage Group operated out of the same office.
- The Director is satisfied that Canada Mortgage Group contravened subsection 27(1) of Ontario Regulation 188/08 by failing to adequately disclose Canada Mortgage Group’s relationship with FFI to LR, SM, MM, and DR, and by failing to disclose Kalwaney’s and Canada Mortgage Group’s relationship with SJ and BLPC to the Borrowers.
- The Director is also satisfied that Amin contravened section 3 of Ontario Regulation 187/08 by failing to adequately disclose conflicts of interest, causing Canada Mortgage Group to contravene subsection 27(1) of Ontario Regulation 188/08.
D. Failure to Carry out Principal Broker Duties
- Subsection 2(1) of Ontario Regulation 410/07 provides that a principal broker of a brokerage shall take reasonable steps to ensure that the brokerage, and each broker and agent authorized to deal or trade in mortgages on its behalf, complies with every requirement established under the Act.
- In view of the contraventions described above, Kalwaney, as the principal broker of Canada Mortgage Group, failed to take reasonable steps to ensure that Amin and Canada Mortgage Group complied with the Act and its regulations. In fact, Kalwaney was himself involved in determining the unsuitable mortgage amounts for the Borrowers and other elements of the transactions.
- Furthermore, Kalwaney had, and failed to disclose, direct conflicts of interest in the above-described mortgage transactions arising from his and Canada Mortgage Group’s relationships with SJ and FFI.
- Therefore, the Director is satisfied that Kalwaney contravened subsection 2(1) of Ontario Regulation 410/07.
IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES
- The Director is satisfied that imposing administrative penalties on Amin, Kalwaney, and Canada Mortgage Group under subsection 39(1) of the Act will satisfy one or both of the following purposes under subsection 38(1) of the Act:
- To promote compliance with the requirements established under the Act.
- To prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under this Act.
- In determining the amount of the administrative penalty below, the Director has considered the following criteria as required by subsection 3(1) of Ontario Regulation 192/08:
- The degree to which the contravention or failure was intentional, reckless, or negligent.
- The extent of the harm or potential harm to others resulting from the contravention or failure.
- The extent to which the person or entity tried to mitigate any loss or take other remedial action.
- The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure.
- Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.
Administrative Penalties to be Imposed on Amin
- The Director is satisfied that 9 administrative penalties totaling $45,000 should be imposed on Amin, as follows:
- 2 administrative penalties of $5,000 each, totaling $10,000, for contravening section 3 of Ontario Regulation 187/08 by causing Canada Mortgage Group to contravene subsection 24(1) of Ontario Regulation 188/08 by failing to take reasonable steps to ensure that the mortgages arranged for the Borrowers were suitable to their needs and circumstances;
- 2 administrative penalties of $5,000 each, totaling $10,000, for contravening section 3 of Ontario Regulation 187/08 by causing Canada Mortgage Group to contravene subsection 25(1) of Ontario Regulation 188/08 by failing to disclose in writing to the Borrowers all the material risks associated with the mortgages brokered for them; and
- 5 administrative penalties of $5,000, totaling $25,000, for contravening section 3 of Ontario Regulation 187/08 by causing Canada Mortgage Group to contravene subsection 27(1) of Ontario Regulation 188/08 by failing to adequately disclose Canada Mortgage Group’s and Kalwaney’s relationship with FFI to LR, SM/MM, and DR, and by failing to disclose Kalwaney’s and Canada Mortgage Group’s relationship with SJ and BLPC to the Borrowers.
Administrative Penalties to be Imposed on Kalwaney
- The Director is satisfied that an administrative penalty in the amount of $10,000 should be imposed on Kalwaney for contravening subsection 2(1) of Ontario Regulation 410/07 by failing to take reasonable steps to ensure that Canada Mortgage Group and Amin complied with every requirement established under the Act.
Administrative Penalties to be Imposed on Canada Mortgage Group
- The Director is satisfied that 9 administrative penalties totaling $45,000 should be imposed on Canada Mortgage Group, as follows:
- 2 administrative penalties of $5,000 each, totaling $10,000, for contravening subsection 24(1) of Ontario Regulation 188/08 by failing to take reasonable steps to ensure that the mortgages arranged for the Borrowers were suitable to their needs and circumstances;
- 2 administrative penalties of $5,000 each, totaling $10,000 for contravening subsection 25(1) of Ontario Regulation 188/08 by failing to disclose in writing to the Borrowers all the material risks associated with the mortgages brokered for them; and
- 5 administrative penalties of $5,000 each, totaling $25,000, for contravening subsection 27(1) of Ontario Regulation 188/08 by failing to adequately disclose Canada Mortgage Group’s and Kalwaney’s relationship with FFI to LR, SM/MM, and DR, and by failing to disclose Kalwaney’s and Canada Mortgage Group’s relationship with SJ and BLPC to the Borrowers.
- In determining the above stated amounts of administrative penalties, the Director has considered the criteria listed in section 3(1) of Ontario Regulation 192/08.
- In respect of the first criterion, the Director is satisfied that Canada Mortgage Group’s, Amin’s, and Kalwaney’s repeated misconduct was intentional.
- Although Amin and Canada Mortgage Group were aware of the personal and financial circumstances of the Borrowers, they knowingly and intentionally failed to take reasonable steps to ensure that the Borrowers’ mortgages were suitable; and
- Canada Mortgage Group and Amin intentionally failed to disclose conflicts of interest or any material risks which they were aware of or ought to have been aware of to the relevant borrowers.
- Kalwaney knowingly and intentionally failed to carry out his responsibilities as a principal broker by repeatedly failing to supervise the activities of Canada Mortgage Group and Amin.
- Amin, Canada Mortgage Group, and Kalwaney exhibited a pattern of intentional misconduct which affected multiple vulnerable consumers, and which occurred over a period of 7 months.
- In respect of the second criterion, the Director is satisfied that Canada Mortgage Group’s, Amin’s, and Kalwaney’s pattern of intentional misconduct has caused or has the potential to cause significant harm to the Borrowers and to SM/MM and DR.
- All of the borrowers were senior citizens with low and/or fixed annual incomes. The mortgaged properties were their primary residences. The severe consequences of default, which may include all of the borrowers losing possession of their primary residence, make the mortgage terms especially unsuitable and the misconduct related to the mortgages particularly egregious.
- In fact, MC and BD have already defaulted on the MC Mortgage and BD Mortgage, respectively. As mentioned above, MC was ordered by the Ontario Superior Court of Justice to deliver possession of the MC Property to the lenders on the MC Mortgage. BD is defending a suit brought by the lenders on the BD Mortgage on account of BD’s default on the mortgage.
- Furthermore, Canada Mortgage Group’s, Amin’s, and Kalwaney’s misconduct as licensees under the Act, has the potential to harm public confidence in the regulatory regime established by the Act and its regulations.
- In respect of the third criterion, the Director is unaware of any steps taken by Canada Mortgage Group, Amin, and Kalwaney to remedy the contraventions described in this proposal.
- In respect of the fourth criterion, the Director is satisfied that Canada Mortgage Group, Amin, and Kalwaney derived substantial direct economic benefit from the contraventions described in this proposal. Canada Mortgage Group received a total of $40,995 in the form of brokerage fees from lenders for arranging mortgages for the Borrowers as well as LR, SM/MM, and DR. Kalwaney is the the sole director and officer of Canada Mortgage Group and benefitted from the contraventions through Canada Mortgage Group.
- Amin received $4,099.50 as commissions for arranging mortgages for the Borrowers as well as LR, SM/MM, and DR.
- In respect of the fifth criterion, the Director is unaware of any further contraventions or failures to comply in the preceding five years by Canada Mortgage Group, Amin, and Kalwaney, other than those discussed in this Notice of Proposal.
- The Director is satisfied, having regarded all the circumstances, that the proposed amount of the penalty is not punitive in nature, and the amount is consistent with one or both purposes of section 38 of the Act.
- Such further and other reasons as may come to the attention of the Director.
- The Director is satisfied that there are sufficient grounds to impose administrative penalties in the above stated amounts on Canada Mortgage Group, Amin, and Kalwaney.
DATED at Toronto, Ontario, September 8, 2023
Original signed by
Elissa Sinha
Director, Litigation and Enforcement
By delegated authority from the Chief Executive Officer
Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.